The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) announced a reduction in the overnight deposit and lending rates by one percentage point, setting them at 24% and 25%, respectively, following its meeting on Thursday. This decision reflects the bank’s ongoing efforts to manage inflation and support economic stability in response to evolving market conditions.

The CBE uses interest rates as a primary tool to control inflation, which measures the rise in prices of goods and services. By lowering rates, the bank aims to stimulate economic activity when inflation shows signs of easing, while rate hikes are employed to curb rapid price increases. This latest cut follows a significant rate adjustment earlier this year. On March 6, 2024, the MPC held an extraordinary meeting and raised the overnight deposit and lending rates, along with the CBE’s main operation rate, by 600 basis points, bringing them to 27.25%, 28.25%, and 27.75%, respectively. The credit and discount rate was also increased by 600 basis points to 27.75%.

The decision to lower rates signals the CBE’s confidence in stabilizing inflation, which has been a persistent challenge for Egypt’s economy. Analysts suggest this move could encourage borrowing and investment, fostering growth in key sectors. However, the bank remains vigilant, balancing the need for economic stimulus with the risk of inflationary pressures. The MPC’s latest action underscores its commitment to adapting monetary policy to ensure long-term economic resilience while addressing immediate market needs.